Bunzl buoyed by ‘high volume, low margin’ kitchen supplies biz

Bunzl Lockhart customer

A recovery in the hospitality sector and the commencement of refurbishment programmes have led to an improvement in foodservice equipment sales for Lockhart owner Bunzl, the group said this morning.

Unveiling its 2014 accounts to the market, the company reported “strong growth” from its hospitality supplies business, which includes companies such as Lockhart Catering Equipment and Bunzl Catering Supplies.

Bunzl chairman Philip Rogerson said: “As markets gave recovered, a number of customers have commenced investment and refurbishment programmes. We also achieved good sales of catering equipment supplied in response to the government initiative of Universal Infant Free School Meals and a broader range of foodservice products provided during the Commonwealth Games in Glasgow.”

Although the company didn’t break down numbers for its hospitality division, Rogerson said the strategy to target high street customers and chains had paid dividends.

“We continued to focus on the high street coffee and quick service restaurant market and have experienced good growth with existing customers and also added a number of new customers to our portfolio,” he said.

Bunzl said that part of its strategy in this “high volume and low margin” market is to reduce the size of its operating platform. As a result, it has consolidated its national distribution centre and two branches into a single 165,000 square foot facility in the West Midlands.

Rogerson added that Bunk’s private label programme was proving successful, having been created to reduce costs for customers, enhance its own margins and maintain a quality offering. He said sales had “grown well” over the past 12 months, with glassware and crockery among the newest lines launched.

Bunzl own-label products in the catering equipment sector include Arctica, Brigade, Chefmaster, Classic, Prepara and Signature.

Bunzl operates businesses in various sectors, including safety supplies, healthcare supplies, retail packaging and marketing services.

Overall UK revenues at the group increased 6% to £1.08 billion last year, while adjusted operating profit increased 12% to £80m. Operating margin improved from 7% to 7.4% year-on-year.

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